Nothing you paid is deductible. What you paid is your beginning tax basis. It will increase by income items and decrease by expenses items and distributions. Since you are buying stock, your outside basis may be different than the inside basis. There is no Section 754 step-up when dealing with an S-corp. So if you paid $100,000 and the S-corp that has an inside tax basis of $60,000, the extra $40,000 goes nowhere until you sell or it goes out of business. Things would be different if you did an asset purchase.
